Get Big or Get Out

Iowa Republican Senator Chuck Grassley is a prototypical rural conservative, in that he decries government involvement while championing federal agriculture subsidies and mandates for corn ethanol. Where he breaks from the herd is the Senator’s laudable, principled stand against gross inequity in the farm subsidy program by fighting year after year for payment limits to mega farms and wealthy landowners.

Grassley has been particularly tenacious with an “actively engaged” rule that would tighten eligibility for farm subsidy recipients. The Senator believes federal farm welfare should only be distributed to those directly involved in a farm’s day-to-day operations.

In other words, if your ass isn’t in a tractor seat you shouldn’t get a farm subsidy check.

The US Department of Agriculture has been tinkering with the rule for years. The agency proposed in March to limit the number of farm managers who can receive federal checks in farm operations considered non-family joint ventures or general partnerships. The public comment period for USDA’s latest attempt to exclude non-farmers from the subsidy regime ended May 26th. DTN/Progressive Farmer’s Chris Clayton reported this week on Grassley’s mounting frustration with the lack of progress, voiced during a weekly Tuesday conference call with reporters.

Large, complex business operations may be able list up to three farm managers eligible for farm-program payments “only if they can show all three are actively and substantially engaged in farm operations.”

The public comment period for the proposed rule ended May 26. The rule received just 89 comments overall, but most major agricultural and commodity groups wrote in regarding the rule.

“I can’t help but shake my head in disbelief at a few of the comments,” said Grassley, a Republican from Iowa.

“Some comments focus on the fact that is isn’t enough only three managers who qualify through the traditional way of contributing land, capital or equipment,” Grassley said. “In other words, being actively engaged rather than being a Wall Street farmer.”

Grassley criticized one commenter who had 15 farm managers overseeing a total of 15,000 acres, or effectively one manager for every 1,000 acres. “With the advancement of technology, it seems more likely that those 15 managers are probably used to collect farm payments than to do actual management,” he said.

In a blog post from December, the Center for Rural Affairs’ Traci Buckner echoes some of Grassley’s concerns. She also reminds the Obama Administration that tightening these rules was a campaign promise.

In its current form, investors are considered actively involved in farm management by virtue of participating in two conference calls annually. That allows mega farms to get unlimited payments by forming general partnerships with investor partners, each qualifying the farm for another set of payments up to the limit, essentially subsidizing the largest and wealthiest farms on every acre they add to their operation.

So while President Obama vowed to take “immediate action” to close this loophole, he has yet to act. He passed on the opportunity in 2009, when the administration was focused on implementing the 2008 Farm Bill that called for them to redefine what it means to be “actively engaged” in farming.

Grassley and a handful of government watchdogs and farm reform advocates have been fighting the “conference call farmer” giveaway for more than a decade even as back to back administrations have fumbled the ball. In a glaring example of the program’s fiscal weakness, Southern growers were notorious for constructing “Mississippi Christmas Trees” that would expand the field of subsidy recipients to maximize the taxpayer-funded haul from Uncle Sam.

In one case, Mississippi cotton farmer Kenny Goodman was sentenced to 5 years in jail after he set up a web of 78 corporations and partnerships that collected $11 million in subsidies. The first clue for prosecutors that something was amiss was the name of one of his companies: Get Rich Farms.

In one instance, the GAO reviewed an unnamed, 11,900-acre farm with 11 partners that collected $1 million in subsidies in 2001; the USDA had previously determined that all of the partners were “actively engaged” in the farm.

However, the GAO found that none of the partners lived in the same state as the farm. The partners held five meetings during the year, and they often participated by phone, if at all. Seven partners participated in all the meetings, two participated in four meetings and two participated in three.

Did anyone rise up during the comment period to defend this unjust, borderline fraudulent use of taxpayer dollars? Did the agriculture industry that relies on the image of bucolic family farmers clamor for closing the tractor-sized loophole that clearly puts highly profitable mega farms well before smaller farms for government assistance?

From Clayton’s piece:

The senator lamented reaction by some farmers and farm groups that ask for USDA to scrap the rule.

Clayton writes that the National Association of Wheat Growers, the National Corn Growers Association, and a coalition led by the American Farm Bureau Federation that included the American Society of Farm Managers and Rural Appraisers, National Cotton Council, Southern Peanut Farmers Federation, USA Rice Federation and Western Peanut Growers Association all commented in opposition to tightening the rule. The Farm Bureau coalition was especially defensive of the handouts to wealthy agribusinesses.

According to those groups, USDA also estimates the three-manager rule would affect a total of 635 joint operations that have more than three managers. The groups argue while that is only a small number of operations, “the statistics show that those impacted are also the farms contributing the greatest amount of production value.”

There are two million farms in the US and the farm lobby is concerned with protecting the subsidies for 635 of them over others because they are massively productive. That may make sense on some economic level, but these programs are sold to funders (taxpayers) as helping struggling family farmers and not large, highly profitable agribusinesses.

The definition of government waste is spending money when you don’t have to. These 635 farms need no government support and constantly probe like velociraptors for vulnerabilities in the system to maximize their federal take. Worse, the capital and inflated land values these mega farms accrue through subsidies perversely allows them to outbid small and mid-sized farms for land and get bigger.

Turns out the constant mantra in farm country of get big or get out is highly subsidized.

Meanwhile hungry families looking to food stamps (SNAP) as a last resort to put food on the table have stringent hoops to jump through and means tests to receive their meager benefits.

GOP presidential candidates are now crisscrossing Grassley’s home state of Iowa. A Des Moines Register and Bloomberg Politics poll released on Tuesday shows 93% of Iowa Republican caucus goers list the budget deficit as their number one issue. While campaigning in the Corn Belt’s buckle it would be refreshing to hear a candidate like Scott Walker or Carly Fiorina point out this gross disparity in farm program welfare as a way to address needless spending.